Clout of regional expos grows as brands continue to look to smaller cities

May's double-digit growth in auto sales was largely driven by the release of hundreds of new models at Auto Shanghai, the largest domestic event in the industry this year, insiders say.

Analysts are projecting that the momentum will be sustained in June because of a number of shows in other cities this month.

Automakers and consumers are paying increasing attention to these regional shows, such as the the Xi'an auto show, held from June 8 to 17

"I put the Xi'an auto show on my schedule quite a long time ago. What impressed me the most about the event was actually the new model launches, which were fresh and interesting," said Wen Jie, a 32-year-old creative director at an advertising studio in Xi'an, Shaanxi province.

He said he also visited the Xi'an show last June, hoping to replace his car with a popular new model.

After sending an official contingent to the Xi'an show for the first time last June, Mercedes-Benz showed up again at this year's event with 24 models, including the national launch of the smart cityflame limited edition.

"We announced the official establishment of Region West operations at last year's Xi'an auto show as a key part of Mercedes-Benz's overall China strategy. Since then, we have achieved great progress in this region, from sales to network development, marketing and after-sales services," said Jason Liu, vice-president of Beijing Mercedes-Benz Sales Service Co Ltd and head of Region West.

He said following the company's successful "Year of the SUV" campaign in 2012, the Mercedes SUV family has seen strong growth momentum, with the GLK and ML contributing to 35 percent of Region West's sales for the first five months this year.

"Mercedes attaches great importance to the Region West markets, especially the regional hub of Xi'an and its neighborhood. Compared to first-tier cities like Beijing and Shanghai, the Xi'an market is growing faster, is more dynamic, and has bigger potential," Liu said.

Mercedes is planning a world-class 4S store in Xi'an this year and will add at least 10 showrooms in Region West this year with a focus on penetrating markets in third- and fourth-tier cities, he said.

"By 2014, we aim to double our dealerships in the region to more than 55," Liu said.

Shenzhen show

The same month, an international auto show in Shenzhen, Guangdong province, attracted more foreign automakers, especially premium brands, to debut their new models.

Mercedes' major rival Audi presented a lineup of 20 models at the 2013 Shenzhen, Hong Kong and Macao International Auto Show.

"South China is one of our most important markets. The discerning consumers and their spending habits here have made the city a bellwether of China's auto market," said Ge Shuwen, executive deputy general manager of the Audi sales division in China.

In the first five months, Audi sold 8,527 vehicles in South China, increasing 34.26 percent from a year earlier and outpacing the 23 percent growth the company saw throughout the country.

Mercedes-Benz also displayed 29 models at the show.

"Our presence here reflects the important contribution that Shenzhen and the southern region make to Mercedes-Benz' sustainable development in China," said Nelson Lau, vice-president of Beijing Mercedes-Benz Sales Service Co Ltd and head of Region South.

In the first four months of 2013, the southern region maintained a steady 8 percent growth rate year-on-year, greatly supported by nearly a 40 percent growth in April.

"This demonstrates positive growth momentum going into the second quarter," said Lau. "In the second half of this year, Mercedes-Benz plans to add 15 dealer outlets, showrooms and service stations to the southern region."

British premium carmaker Jaguar Land Rover launched its South China strategy at the Shenzhen auto show.

The company plans to expand its dealership network from 28 to 38 and set up its first twin-brand showroom in Hong Kong in the city's busiest business district Causeway Bay.

It reported a 24 percent year-on-year sales increase in South China region in the first five months compared to overall growth of 17 percent in China.

Analysts said that automakers' growing participation in the recent regional auto shows reflects their recognition of the potential in lower-tier cities.

In the recent years, governments in Beijing, Shanghai and Guangzhou issued environmental and traffic policies to curb the number of cars on the road, which took a toll on auto sales in those major markets.

Moreover, with urbanization accelerating and household incomes rising in lower-tier cities, automakers are shifting their focus from the big cities.

Statistics project that by 2020, vehicle deliveries in second- and third-tier cities will contribute 55 percent of total sales, while the first-tier cities only account for 15 percent.

"Over the next two to three years, consumers in second and third-tier cities will take the leading role in vehicle consumption," said Lin Lei, CEO of consulting firm Sinotrust.

lifangfang@chinadaily.com.cn

(China Daily 06/24/2013 page18)